Nigeria has the highest amount of trapped airlines funds within the past year, according to the International Air Transport Association (IATA).
– A key point to note
Blocked funds belonging to foreign airlines operating in Nigeria have increased to $743.7 million from $662 million in January 2023 and $549 million in December 2022, IATA West and Central Africa area manager, Samson Fatokun, said at a meeting with Nigeria’s aviation minister Hadi Sirika on Tuesday.
Nigeria is battling a scarcity of foreign exchange which has affected its local and international obligations and transactions. In November 2022, the aviation ministry indicated it was willing to engage the foreign airlines in an effort to effect repatriation of their trapped funds.
At about the same period, Dubai-based Emirates Airlines suspended its flight operations in Nigeria indefinitely due to their trapped funds.
– Why this matters
The country’s failure to release airlines’ funds has implications for the economy and the travelling public, the IATA official said, according to the News Agency of Nigeria.
Already, some airlines have reduced the number of their frequencies or seats made available for sale in the Nigerian market to mitigate the increasing backlog of their funds in Nigeria and its impact on their cash flow.
“Moreover, going by the law of demand and supply, the reduction of airline inventories in the Nigerian market will lead to ticket fare increase which would further burden average Nigerians and take air travel away from the reach of many Nigerians,” Mr Fatokun was quoted as saying.
He said the increasing backlog of international airlines blocked funds in Nigeria will negatively affect the country’s Foreign Direct Investment (FDI) as investors would be wary of bringing money into the country.
– Learn more
Mr Fatokun appealed to the Nigerian government to help resolve the matter.
“Foreign airlines fly into Nigeria within the legal framework of the Bilateral Air Service Agreement (BASA), signed between their countries and the Federal Republic of Nigeria,” he said.
“It is agreed in those BASAs that Nigeria will facilitate the repatriation of the funds of the other party’s airline. Nigeria flouts this contractual obligation by not facilitating enough the repatriation of airlines’ funds.”
The aviation minister said he would dialogue with the CBN and presidency for the funds to be unblocked.
Discover more from Pluboard
Subscribe to get the latest posts sent to your email.